Obama Aims to Address Worries About Widening Deficit

WASHINGTON -- President Barack Obama sought to assure the nation Monday that he will address runaway government deficits, despite adding to the red ink now to battle the economic crisis.

After a four-hour "fiscal responsibility summit" with both Republican and Democratic lawmakers, Mr. Obama said he was paying attention to fiscal matters large and small. He also announced a summit on health care next week at the White House, to follow the unveiling of a budget Thursday that will make room for his proposal to offer Americans near-universal health care.

"We're not going to be able to fall back into the same old habits," Mr. Obama said. "The casual dishonesty of hiding irresponsible spending with clever accounting tricks, the costly overruns, the fraud and abuse, the endless excuses."

As Mr. Obama pours money into the economy in hopes of turning it around, he is also faced with making tough decisions on stemming the tide of red ink without strangling a future recovery. He told the nation's governors Monday that the federal government will have dispensed $15 billion by Wednesday to begin shoring up the states' strained Medicaid accounts. In a speech before a joint session of Congress Tuesday night, Mr. Obama will propose some specific spending cuts, as well as the additional spending he wants on energy, education and health care, White House spokesman Robert Gibbs said.

Some participants in Monday's summit concluded that the president will attempt to address the financial soundness of the Social Security system before moving on to other, more complicated problems, such as health-care costs.

"Fixing Social Security is a shared, bipartisan goal, and it can be accomplished right away," said Sen. Judd Gregg (R., N.H.), who withdrew his nomination to be Mr. Obama's Commerce secretary in part over differences in fiscal policy.

But Treasury official Gene Sperling hinted that health care could come first: "Social Security does provide the potential for something that could be done, regardless of whether it is this year or next year," he said.

Some Republicans complained after the summit that, for now, much of the president's approach on the deficits appears to be theater. "If the administration wants to get serious about our budget deficit and our mountains of debt, they are going to have to do a lot more than host a summit, they are actually going to have to make some tough decisions like reining in out-of-control federal spending," said Antonia Ferrier, a spokeswoman for House Minority Leader John A. Boehner (R., Ohio).

Mr. Obama bantered with his former rival, Sen. John McCain (R., Ariz.), and turned serious when discussing America's reliance on international lenders to keep the government afloat.

"We cannot, and will not, sustain deficits like these without end," he said. "Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration, or the next generation."

Obama's Remarks

President Obama speaks to members of the National Governors Association in the state dining room of the White House.
Bloomberg News

Participants in the summit showed just how difficult finding consensus will be. At a session on tackling the long-term debt problem, Sens. Gregg and Kent Conrad (D., N.D.) said Congress has proved that it cannot address Medicare and Social Security spending growth -- or the tax increases that may be needed in the future to fund the government -- without some mechanism to force it to act. They proposed a commission that would draft recommendations and force an up-or-down vote to approve them.

"It is unrealistic to think that a system that has delivered this problem is going to take us to a better place," agreed Sen. Evan Bayh (D., Ind.).

But other powerful voices called this approach an undemocratic and unfair abrogation of responsibility by Congress that would ultimately fail.

"A commission response will thrill policy wonks and not get a damned thing accomplished," said House Appropriations Committee Chairman David Obey (D., Wis.)

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